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Apple's stock is down about 9% since Wall Street went into "full panic mode." Ahead of Apple's earnings on Tuesday, John Archer added to his position reasoning that Apple will either surprise Wall Street to the upside or they will solve whatever problems they have within his investment horizon. Here's the best argument for an upside surprise from Apple on Tuesday.

The panic started after Taiwan Semiconductor Manufacturing (TSMC) lowered its revenue guidance for Q2 due to weak demand. TSMC did not blame Apple for its lowered guidance, but that is what Wall Street inferred especially after AMS, another major Apple supplier, said it expects sales for the current quarter to be down nearly 50 percent from last quarter.

Investors who sold believing that lowered guidance from Apple's suppliers presages disappointing revenues from Apple are forgetting that prices affect revenue just as much as volume.

When Apple launched the iPhone X, they raised the base price to just under $1,000. The iPhone X is just about double the price of iPhone 7 and about 40% higher than the iPhone 8.

When they set these prices, Apple had to believe they could still hit their revenue and profit targets as long as the volume did not decline as much as the price increased.

What we are learning from TSMC and AMS is that Apple's volumes may have indeed gone down. But unlike Apple, TSMC and AMS did not get a price increase to offset the lower volumes, so they are guiding expectations for their revenues and earnings lower.

The inference that Apple's revenues and earnings will also be lower ignores the impact of the higher iPhone X prices.

We will know on Tuesday whether iPhone volumes have declined enough to justify a drop of 9%. But, I suspect that Apple's iPhone volumes have dropped but their revenue and earnings will meet or exceed Wall Street's expectations. If I'm wrong, the 9% drop Apple's stock has already sustained combined with its relatively low valuation compared to other tech stocks will limit the impact from a bad report.

I am the CEO and founder of Marketocracy, Inc.,and portfolio manager at Marketocracy Capital Management, LLC. My firm maintains a database of the world’s greatest “unknown” investors. I require these “Marketocracy Masters” to outperform the S&P 500 for a minimum of 5 ye...